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Taxes in Tough Times

Posted: Jan 24, 2016 at 10:54 am   /   by   /   comments (0)

Nobody likes to pay any tax. It is especially so in a country where public funds are not accounted for. Yet, there is no miracle that can bail this government out except taxes and more taxes. That’s why it has resurrected the Stamp Duties Act of 2004.

Nigerians are not known to be patient people. So, President Muhammadu Buhari just has to appeal for understanding. And his appeal should be directed mainly at young people who were not born or were not adults during his first coming. Judging by the anger I have seen on so many people’s faces, my fear is that the stamp-duty policy may trigger a run on half-dead banks and then finish them off.  On the other hand, it may turn a lifeline for some banks, for they are likely to short-change both government and customers. Electronic banking has enabled them and GSM operators to tamper with customers’ money at will. Only God knows how much we lose to them on a daily basis.

Two recent examples:  On Thursday I received an email from my bank entitled “Introduction of Negotiable Current Account Maintenance Fee”. It reads in part: “We wish to formally inform you that from now on, all customer initiated debit transactions will be subjected to a fee not exceeding One Naira (1.00 NGN) per One Thousand Naira (1,000 NGN) transacted from a customer’s current accounts. This is in line with the Central Bank of Nigeria’s latest circular recommendations to all Banks to implement provisions in the Revised Guide to Bank Charges (RGBC), which proposes a negotiable maintenance fee on current accounts.”  Note the word NEGOTIABLE.


Second, on January 18 I received an unsolicited message on my phone from a number “33078”. It says: “Your Service Music Release is going to renew on 2016-01-20. To unsubscribe at any time send UNSUBSCRIBE to 33078.” I never subscribed to any music and could not therefore be expecting a renewal at N30 per week. So, I quickly sent UNSUBSCRIBE to 33078, and it was acknowledged. But on 2016-01-20, I received another message from the same 33078 saying, “Your subscription to Music Release has been renewed successfully”. N30 per week may appear little for one person. But what if the scam affected 10 million phone users? They would be losing N300million each week to some crooks collaborating with a GSM operator somewhere.

These big businesses have understood that Nigerians take everything for granted. That’s why they do sordid things they would not attempt in other countries. Even when they are caught red-handed, they refuse to pay fines; hiring some cheap SANs to help them wriggle out always appears more attractive. Indeed it’s very easy to make money from Nigerians; one only needs to have the right code.

I have no problem with the re-introduced stamp duty. What it teaches me, however, is to stop sending anybody money by bank, now that the banks have received a blank cheque to deduct N50 from the account of anyone paid N1, 000 and above. In the good old days, we were required to affix a 5kobo stamp on a payment receipt. Lean times are here, necessitating a 1, 000 per cent increase!  I know VAT will also be increased, as IMF’s Lagarde suggested during her visit.

The debate should be on whether the taxes favour the rich or the poor. And where I stand is: the rich should be taxed heavily and the poor, sparingly.  In fact, it would have been better if government seized bank deposits exceeding N50million until their owners proved that they acquired the money by legitimate means. Money hidden in foreign accounts ought to be frozen, too, and repatriated just like the Abacha loot.

This should also be payback time for rich people who always avoid paying taxes in Nigeria. I wonder why nobody is paying property tax even in a city like Abuja that is filled with houses built with stolen funds. Imagine how much could be collected when each mansion (occupied or empty) in Asokoro, Maitama and Wuse is taxed N10million per annum. Their owners would be forced to rent a flat at N12million per year as against the current N100–240million.

Unlucky President Buhari!  New taxes will make his government unpopular. He might even lose votes in another election. Who or what has sentenced the Nigerian leader to running a government that is always on a rescue mission but starved of funds?

Buhari has had the misfortune of not enjoying abundance of resources as a head of state. He missed the Gulf War oil windfall as well as the oil boom that existed between 1999 and 2014. At the peak of the boom sometime in 2008, a barrel of crude was sold $147.  Compare that to the current selling price that is almost equal to the cost of producing it ($28).  Several oil fields may soon be shut down and thousands of oil workers forced to join the employment queue.

When 41-year-old Buhari became military head of state, 32 years ago, Nigeria was on its knees. The Buhari-Idiagbon regime introduced several corrective programmes that really signalled a renaissance. Then, like now, everyone was feeling the heat. Nigerians wanted a painless surgery so much so that when the government was overthrown, 20 months later, only a few had regrets. Many agreed with the coup plotters that Buhari was “too rigid”.

Enter Babangida. With the swiftness of an eagle, he undid all of Buhari’s laudable programmes and policies: all corrupt politicians freed from jails, all seized loot returned to the looters with apologies, the War Against Indiscipline scrapped, IMF loan through the back door, SAP with its second-tier and third-tier foreign exchange market, 419 as big business. Accountability was thrown out the window and corruption became a way of life. Four years into the Babangida regime, we all (except thieves and fraudsters) started missing the Buhari-Idiagbon regime.

This time – Buhari’s second coming – all the three governments that preceded Buhari’s overlooked all other sources of revenue because they were awash with petrodollars. The Stamp Duties Act, for instance, was enacted 12 years ago but the Obasanjo, Yar’Adua and Jonathan regimes ignored it. After all, there was oil money to feast upon! Through a non-existent subsidy, over N1trillion was used yearly to grease the palms of fuel importers (and their collaborating public “servants”) most of whom acquired private jets during the period. Across the country, idle politicians were swimming in money. A senator went home with N22—50million monthly, apart from all the Ghana-must-go bags that frequently changed hands. Prostitution became a thriving industry in Abuja, since the problem of politicians was not money but what to do with money. Regardless of the endless stealing and misappropriation witnessed in those regimes, however, many Nigerians could still get by.

Now, oil money has finished and Buhari is here. Should we bear with him? A hungry man is an angry man. Let the government get that clear.